"We believe this increase [in demand for custom installation services], together with additional higher margin accessory and extended warranty sales, will result in the improvement in our gross profit margin," said Franklin Karp, president.

Custom installation sales of equipment and labor accounted for almost 59 percent of Harvey net sales, or about $13.4 million, for the first six months of the current fiscal year, compared with 53 percent of net sales, or about $12.1 million, for the same period last year.

"We plan to increase our efforts and commitment toward this expanding profit center for the remainder of fiscal 2004," said Karp.

Karp reported that the retailer expected profitable operations for both the second quarter and six months. "We believe the second quarter of fiscal 2003 was negatively impacted by restrained consumer spending during the Iraq war." Harvey did not release earnings at this time.

For the six months, Harvey sales reached $22.7 million, compared with $22.9 million year-on-year. Last year’s six month reporting period was one week longer than this go-around. Comp-store sales for the six months rose 3.6 percent.

The retailer also announced the 10-year lease extension and modification agreement for its flagship midtown Manhattan store. The location continues to represent over 20 percent of the company’s revenue. Harvey said the location was totally renovated in fiscal 2001, and since that time, the store has increased its profitability each year.